The other rumor is that Altice which bought Cablevision and Suddenlink is looking at a nearly $2B IPO and will use those proceeds to buy Cox. But that may not happen because Charter now wants to buy Cox.
John Malone, the pioneer cable consolidator, has been all about consolidating cable, telco and wireless. His Liberty Interactive just acquired Alaska's GCI for $1B. There is noise that he would flip that to Charter. Cox plus Bright House plus TWC plus Charter plus GCI gives a 49 state footprint and would make that entity bigger than Comcast.
Charter was fined by New York State $13 million for not living up to its merger agreement. The rest of us are enjoying newer, higher pricing.
Meanwhile Comcast is being sued for cutting a small Texas ISP's lines and putting them out of business after they rebuffed an offer to be acquired by Comcast.
Just to add some notes, a bunch of Senators asked the DOJ to "closely scrutinize AT&T's proposed acquisition of Time Wamer." It won't change the course of this consolidation.
As 5G rolls out -- or 4G gets density to satisfy the bandwidth consumption of mobile Americans, you pick -- it will require a lot of fiber to towers and small cells. The editor opinion on Fierce makes it sound like the cellcos weren't hard nosed negotiators before now. Sheesh. There has always been a cap on how much a cellco would pay for bandwidth to a tower. Always.
Nearly 25% of Urban Americans aren't connected to broadband internet, usually due to cost for broadband. And despite the fact that Americans pay more for broadband than other countries, Wall Street is asking the ISPs to charge more. Greed.
The divide between rural broadband and urban is still large. The short fall at the USF Fund isn't helping. The telcos, including AT&T, want that funding to do any build outs. A political hot potato to add to the pile with Net Neutrality, mergers, healthcare and the whole American infrastructure (bridges, roads, power grid).
Bigger not Better.
Who thinks that the CenturyLink acquisition of Level3 will be derailed by the $12B lawsuit that C-Link is facingin the wake of charges that they pulled a Wells Fargo accounting scam?
One last thing: GTCR acquired Inteliquent. GTCR also owns Onvoy. They merged them and decided to keep the name Inteliquent.
]]>Enterprises buy a variety of computing services from public to private along with VPS, hosting and everything in between. "It's easier for enterprises to develop, test, operate and migrate workloads across hybrid architectures when the CSP's public and private cloud code base is the same, or at least virtualized and functioning identically." However, they cannot procure this variety from Amazon or Google. They would to go to the likes of IBM, Microsoft and Oracle.
"Consumer tablet demand continues to shrink. Apple is the only manufacturer seeing an improvement in buying." Not good news for the cellcos.
"Future data centers will include technologies such as advanced data center management software, distributed resiliency, prefabricated modular (PFM) components and dexterous robots." Meanwhile Telcos are exiting the data center business (WIND, C-Link, VZ).
PE firms own many of the data center companies, including Peak 10 which acquired Via West from Shaw today for $1.7 Billion. In addition, Dupont Fabros merged with Digital Realty. That is along of transactions and consolidation in the space.
Upgrade those pipes!
Cisco's report on Internet traffic growth is out with many pretty graphs. "Globally, Internet traffic will grow 3.2-fold from 2016 to 2021, a compound annual growth rate of 26%. Globally, Internet traffic will reach 235.7 Exabytes per month in 2021, up from 73.1 Exabytes per month in 2016. Global Internet traffic will be 7.7 Exabytes per day in 2021, up from 2.4 Exabytes per day in 2016."
What is an Exabyte? "Global Internet traffic in 2021 will be equivalent to 707 billion DVDs per year, 59 billion DVDs per month, or 81 million DVDs per hour. In 2021, the gigabyte equivalent of all movies ever made will cross the Internet every 1 minutes."
According to Akamai, "Slow IPv6 adoption is a conundrum in light of IPv4 address exhaustion." Global Average Internet Connection Speed = 7.2 Mbps. Yet "U.S. speeds averaged 18.7 megabits per second compared with 28.6 Mbps for global leader South Korea." Most of that is cable modem download speeds since MSOs have the lion's share of broadband customers in the US. DSL is dragging us down.
The Duopoly is looking to strip Net Neutrality rules, claiming they stifled growth. OOPS! "Broadband speeds have soared under net neutrality rules, cable lobby says."
"Fiber is basically the nervous system of the networks of the future," Malady said and Verizon is making big investments in it." Good insight.
]]>Highlights:
Smartphone growth is slowing.
Global Internet use continues to grow at 10% year over year, with 3.4 billion people on the Internet as of 2016. [QZ]
Advertising is about visuals (pics/vid), measurement, mobile and engagement. UCG (user generated content) is back.
Growth in Internet population is slowing, but growth in online ads is accelerating.
Combined, Google and Facebook accounted for 85% of the total internet ad revenue growth between 2015 and 2016. [QZ]
Amazon Alexa and other voice assistant devices are disrupting Brands as well as text based search. That is going to effect advertising revenue on one hand. On the other hand, Alexa is pushing Amazon house brands over better known quantities in order to push up margins. And they are winning at it!
Customer Service is about real time customer conversations. The Holy Grail used to be single call resolution that was hampered by silos and technology. Today with AI, Cloud, omni-channel contact center, we are closer than ever to that goal.
Retail has some bright spots but requires strong community and specific target market (slide 58). Or Subscriptions. [Funny, I say the same thing about UC/Hosted VoIP!]
For Restaurants, Eating Out is now Eating in with restaurant delivery. Grocery shopping is also about personal and delivery. Do you see where this is trending?
I am skipping Gaming, China, india, except to say that Gaming is a skills school and the old time the phone is put away (as another tech toy has your attention).
88% of U.S. consumers use at least one digital health tool.
"The rise of fitness trackers and health apps are collecting more user data than ever, while hospitals are sharing more health care information with patients. The average hospital holds 50 petabytes of health care data, and the total amount of that data is growing by 48 percent a year, Meeker says." [venturebeat]
What happens online in 60 seconds: HERE.
]]>Even Fairport, acquired by RLEC Consolidated, is upgrading its network for higher speeds. Some of this is due to the fact that cable is winning the broadband war. Some of it is powered by USF Reform whereby broadband is the metric for dollars. Add in the Connect America Funds (CAF) and other federal and state incentives for broadband and middle mile fiber deployment. AT&T, Verizon, Windstream and CenturyLink have all talked about upgrading the broadband infrastructure. (BTW, this flies in the face of the new FCC Chairman's claims that investment went down after Title II.) It comes down to revenue - and DSL was not cutting it.
Fiber deployment is tough (just ask Google). Many providers use a mix of technologies. TPX (formerly known as TelePacific), Windstream, XO and Google Fiber use fixed wireless for broadband. Thousands of WISPs in America have been utilizing wireless to deliver broadband for years. The bigger guys are now jumping on the bandwagon. To be fair, the technology is not only better, but cheaper.
This from DSL Prime: (from Sail Internet in Fremont California) "George Ginis used Mimosa's super Wi-Fi to connect a customer a customer with 435.74 down, 331.83 up, and 4 ms ping. 5 GHz Mimosa is designed like a mmWave network but a heck of a lot cheaper than 28 GHz. Interesting alternative."
DSL Prime has an ad from Sckipio about Virtual fiber. "Extend your fiber with 100-300 meters of single-port G.fast. It can save expensive trenching for cell towers, small cells, basement fiber, commercial customers and others. A very thin management layer allows operators to keep their existing GPON management layer. Sckipio makes it effortless to add G.fast to any GPON network." G.fast uses copper like VDSL2. We'll see if it gets adopted in the US like it is in Europe.
Also on the copper side is trials by ASSIA for Terabit DSL. See here. Companies are at work to extend the life of wireline broadband to satisfy the consumer appetite for downloading videos. On the business side, the same technologies will be used to feed the business appetite for cloud apps - fixed wireless, 4G/LTE-A/5G, DSL/T1, cable modem and fiber. SD-WAN will be layered on top for metrics, failover/resilience and more. Interesting times.
]]>RAD: What does LEOSAT do?
Ronald van der Breggen: LEOSAT is launching an MPLS network in space at 1440 km altitude. Once accessing this constellation of MPLS routers (mounted on satellites), we can carry traffic from anywhere to everywhere with lower latency than fiber and with capacities in the Gigabit range. Whether one wants to go from an Oil rig in the Gulf of Mexico to a mountain top in the Himalayas or from the middle of NYC to Abu Dhabi, this constellation will allow you to setup the connection almost instantly with a performance and security that exceeds fiber.
Interesting that they would setup an MPLS network now when everyone says MPLS is dead.
RAD: What did LEOSAT expect to get out of WAN Summit?
Ronald van der Breggen: Satellites are traditionally perceived as slow and expensive. So first and foremost we wanted to change that perception to one of satellites 'providing real solutions for global data-networking'. LeoSat can e.g. help Telecom operators to connect their global customers faster, help them in providing ultra-secure networking (LeoSat carries traffic physically separated from terrestrial networks), help them with connecting mobile sites, off-shore sites and sites in harsh environments. All of this can be done either as a last mile solution or as a more secure end-to-end solution. The list of options goes on and on and working with resellers and customers in Maritime, Enterprise, Media, Government, Oil&Gas and Mobile, we're enthused by hearing so many new application areas on an almost daily basis.
Ronald van der Breggen: At the WAN Summit, we enjoyed a lot of enthusiastic responses that lead to quite a few follow up meetings.
RAD: How is latency faster on a satellite than on a terrestrial network?
Ronald van der Breggen: Latency is indeed a lot lower, NYC-Tokyo is under 100ms, whereas terrestrial is 150-170ms. Even if a straight cable were built, we'd still be 20ms faster. As light traveling in a fiber optic cable travels at 2/3 of the speed of light, we start showing latency advantages when cable length starts exceeding 5000 km. Every satellites adds roughly 2ms in latency (conservative estimate). For extra proof read the Leosat FAQ
A press release that he sent to me: LeoSat Enterprises Contracts First Customer: Faster than fiber: Leosat's lowest-latency solution expected to revolutionize data connectivity in financial trading sector.
]]>"The U.S. (and the world) is in the midst of a sea change in how we spend our leisure time. Young people are less inclined to indulge in America's favorite pastime: zoning out in front of the TV. On average, people ages 18 to 24 spend half as much time watching live and recorded television as 35-to-49-year-old Americans, according to Nielsen...... Young people are definitely watching video, but it's more likely something from YouTube or a friend's Snapchat story on their phone than the episode of "Grey's Anatomy" their parents are watching on the living room TV."
"All told, traditional cable, satellite and telco pay-TV services (not counting OTT offerings) lost a net of about 1.64 million video subscribers last year as compared to a loss of some 980,000 in 2015." [telecomp]
Telco TV was too late to the party. It cost the telcos billions of CAPEX dollars to find out that cord cutting was real and OTT video - Netflix, Hulu, YouTube, Amazon Prime, Sling TV -was going to be the winner.
The economics look upside down. Bear with me here. Right now the cable operators are winning the war for both broadband and voice. In many areas, cable is now the incumbent voice provider.
With triple-play the operator sees ARPU of about $161. If the customer only buys broadband - which is happening more and more - the ARPU drops to $65. Never mind the tax implications for federal, state ad local government (they are screwed either way), just consider what this does for revenue numbers.
The ripple effects are already being seen. ESPN, the Disney owned sports channel, is in a tail spin with a loss of about $500M in revenue per year from cord cutters. Cable channels are either being closed by the content owners or re-named and re-tooled. There aren't 500 useless channels; there are 1M with all of the streams and social media. This will be a real problem for content creators, actors, writers and advertisers.
Windstream, CenturyLink and other RLECs (Frontier, Fairpoint, TDS, et al) have been working hard to get the percentage of revenue from residential/consumers from the average of 75% to a 50/50 mix with business services. Windstream bought EarthLink; CenturyLink bought Level3. TDS bought managed IT firms and data centers. Fairpoint sold itself to Consolidated Comms. Frontier keeps buying states from Verizon and AT&T; consequently, their mix is still heavily consumer.
Everyone has a revenue problem. Pricing pressure has squeezed every operator. It will get worse. Millennials don't want to pay a cable company. They have a huge cellular bill and student loans totaling $1 Trillion. Couple that with stagnant wages and a bleak jobs future that is getting darker with all the investment in robotics and AI, the economic outlook doesn't look bright. As I have asked before: if wages are stagnant, how does someone continue to keep the economy spinning with buying?
I hope, unlike cord cutting, that operators don't have their head in the sand on this issue.
With 5G trials rolling out, will the next generation - who aren't buying homes and aren't buying cars - buy wireline broadband? A few analysts say Unlikely. I already know several twenty-somethings and thirty-somethings that do NOT have terrestrial / wireline broadband. It is all smartphone and hotspot at home.
What does that do to the economics of the network? Business revenue will become even more important. And as revenues decrease, price increases will result, which will mean less subscribers.
Planet Networks believes that rural and under-served areas will still be on wireline because 4G and 5G will not get there any time soon. That may be true - so RLECs will be happy - but the majority (80%) of the population lives in urban areas.
In other nations, cellular (including fixed cellular) are sometimes the only available network. It is cheaper to put up towers and radios than to dig up streets and sidewalks to lay fiber.
]]>I sat down with an old colleague from ISPCON days, Tristan Barnum, and her co-founder at Tellient, Shawn Conahan. We talked about IoT, the Internet of Things, and its similarity to WebRTC. WebRTC was tech; VoIP is tech. Both needed a business plan wrapped around it to make sense. (The technology alone is not a business.) The technology has to be monetized. Tellient is in the business of monetizing IoT.
Conahan describes a marketplace as the place where data inputs into other data. All that data by itself means little. It takes analytics as well as understanding to give that data meaning. Then you can take that data and deliver it to a user in a fashion (or graphical form) that he/she can understand and utilize, in place of a terabyte of ones and zeroes.
"For companies wanting to embrace the Internet of Things to extract the greatest value from their products and customer relationships, the new value chain must include device analytics." [from the Tellient website]One example Conahan gave was over a NOAA buoy, which can be used to improve shipping routes from the same data that the NOAA collects (but doesn't use.) Another example came from GoGo (the satellite Internet provider to airlines) who will use data to help airlines avoid turbulence, which wears on both the passengers and the planes.
In a way Tellient is helping to build a mesh network to connect data from a number of connected sources, add analytics to it and provide a functional output (like graphs).
For me, Big Data, AI (artificial intelligence and bots), math (algorithms + analytics) are all coming together at the same time as sensors, computing and connectivity are all hitting mass market penetration. Look at the Raspberry Pi, a $5 computer! Sensors are under a dollar each. Smartphones can be had under $100. Connectivity is all you can eat. Data storage on AWS or S3 is pennies. All of this hardware is commodity. The smarts - the math - is where the business plan is. It is where the money is.
]]>There are 2.5 billion smartphones on the planet now, according to Ben Evans.
"China now has 656 million internet users. Brazil trails only the US in total Facebook, Twitter and YouTube users, and the country has more mobile devices than human inhabitants." [TCrunch]
Google, Apple, Facebook and Amazon are 3x the scale of WinTel. Not just giants in tech, but giants in the economy as well. More so than IBM or WinTel. [mobile is eating the world]
Machine learning and AI are getting exponentially better each year.
Facebook has between 15-20% of mobile time. And smartphone apps are 60% of all time spent online in USA.
With Amazon Alexa and Google Home (and other voice activated search), what does that do to your SEO or PPC campaigns?! POOF!
There are "nearly 3.8 billion internet users worldwide, almost 2.8 billion are active on social media." The most popular social networks "as of January 2017, based on global traffic figures for unique monthly visitors, shows: Facebook (with 1.1 billion), YouTube (with 1 billion), Twitter (with 310 million), LinkedIn (with 255 million), Pinterest (with 250 million) and Google+ (with 120 million)." [channel partners]
"Cisco and DHL, the world's largest logistics provider, estimated last year that $1.9 trillion dollars of economic value could be created by the use of IoT devices and asset tracking solutions in the global supply chain and logistics sector." [business insider]
NOAA has a new satellite "GOES-16 has four times the image resolution of the existing Geostationary Operational Environmental Satellites (GOES) fleet." See images here.
SIDE NOTE:
That said, people who blame increased connectivity for widening ideological divides misunderstand what's going on. The world is not getting worse, nor are our divisions deepening. We've always had these problems - it's just that connectivity is bringing them to light. Racism, xenophobia, bigotry and sexism have always been there, it's just that we can see them more clearly now. This unprecedented, radical form of transparency feels scary and dark, because it forces us to look long and hard into the corners. But that's also why connectivity is so important. Billions of people are starting to speak out, and that means we are no longer able to claim ignorance, and filter out the terrible things that have happened on the watch of good people in the past. Welcome to the world as it really is, and not the way the gatekeepers used to tell us it was. It's about time. [Future Crunch 30]]]>
"Put it all together and you can see a day when you're watching content that Google produced disseminated via infrastructure that Google owns on a phone that Google made using wireless service Google brokered." Amazon tried it and failed. Google's phones are nice, but the Fi service has done about as well as Google Fiber.
The opposition - the cellcos, the RBOCs, the ILECs - don't want to be just dumb pipes. That's why Comcast owns NBCU; AT&T is buying TimeWarner; and Verizon owns AOL and is buying Yahoo. They want to own the whole OSI stack - Layer 1 to 7 - the walled garden that was AOL.
Facebook wants the same thing. Amazon, Microsoft and Google, too. Live in their ecosystem, where they collect as much data as possible to target you better to sell you more.
Amazon is selling ISP service, as a retail channel for Comcast and Frontier, not as a virtual network operator.
Meanwhile, a bunch of articles over the last two weeks talked about the ILECs lack of investment in broadband. Cable Will Keep Ruling US Broadband.
LightReading states, "All seven of the top MSOs registered broadband subs gains in the summer quarter. Over the past year, the cable companies have added more than 3.5 million data customers. Once again in contrast, five of the seven leading telcos lost broadband subscribers overall in the third quarter as they focused mainly on upgrading their DSL customers to fiber lines, not bringing on new customers." Once again telcos are late to the game - in TV and in competing against DOCSIS. Telcos were even late to get in the DSL game, afraid of losing T1 business. They have always had short term thinking.
"More than 80 service providers have opted out of participation in the Lifeline broadband program for at least part of their territories," writes Telecompetitor. Verizon, AT&T, Cox, Windstream, Charter, CenturyLink, FairPoint and Frontier have all opted out to the FCC. Part of it is "rural carrier stand-alone broadband pricing"; and part is the 10MB x 1MB requirement which DSL can't meet.
Meanwhile, telcos have to re-think their TV strategy in the wake of OTT video. A consortium of them should buy DISH Network and its Sling TV.
After Google Fiber's debacle in 2016, all providers will re-evaluate fixed wireless instead of a wired strategy.
Maybe g.fast makes its way past some trials in 2017.
Will Comcast, Charter or Google become the number 4 cellular provider in 2017 after AT&T, VZW and a combo of T-Mobile+Sprint.
FiberLight, LUMOS, Sprint wireline, Fatbeam, Wilcon, Towerstream, and some others will likely be part of some M&A this year. No one saw Fairpoint getting picked off by Consolidated - or the pending Level3+CenturyLink disaster.
Another year of turmoil coming at you! With a new FCC.
One thing all this says: we don't know what will disrupt in 2017.
]]>One big story was Google Fiber laying off and the CEO quitting. I tend to agree with Beranek on this: Google didn't want to be a network operator. They just wanted to scare the Duopoly into building out broadband networks, so that Google could get more page views a la YouTube.
People don't understand how much obstruction the Duopoly has in telecom. From lobbying to lawsuits, the phone and cable companies hate competition. They do everything they can NOT to compete. So given an upstart - Google Fiber or Covad or a muni network proposal - they go to town throwing up hurdles to success. Big is Bad for Consumers. Period.
The Election: Not getting political but it looks like Net Neutrality will be rolled back. Soon the 4 cellcos will make it look like 1996 again when it was Prodigy, AOL, CompuServe and DELPHI. Walled gardens are coming back. This will make it harder for any new entrants to get a foothold.
Devices: It was the year of device panic from Samsung's blowing up to Apple eliminating the earphone jack. Add in the mix, the hacking of the IOT devices used for DDoS attacks against Krebs and DYN. It was 100K hacked cameras and DVRs that took down the Internet in October. It is only going to get worse. For a society obsessed with guns, why don't we protect our information and devices? The Info War is going to set you back.
BTW, did you see that Quest Diagnostics was hacked? 34,000 accounts. Would you want your medical history online?
It was the year of hacks. Just ask the DNC.
Hacks and outages all year.
A lot of noise about Fake News (true), self-driving cars (almost) and SD-WAN (soon).
It was the Year of Uber. Of all the ride sharing apps including Lyft, Uber seemed to dominate. Close to 25 ride sharing apps have been funded to date, but it is Uber that leads the race, despite famous battles with cities around the globe.
VR got bigger (just as Scoble!) But like Augmented Reality, other than entertainment and early adopters I have no idea who is paying attention.
IOT was big. Everyone is still trying to figure it out. Or more precisely figure out how to monetize it for themselves.
Speaking of which, IAAS has blown up with one clear winner, AWS. At $13 Billion in revenue, it is all of the profit that Amazon shows. Rackspace, a rival, went private this year when a private equity firm acquired them for $4.3B. Like Dell, going private allows them time to pivot without the stock market beating them up. And speaking of Dell and pivots, what a year they had buying and selling. If the smoke ever settles in Austin, it will be an interesting story.
Artificial Intelligence is something I tend to think of as analytics and data mining. (We went from Big Data to AI.) From Siri to Alexa to IBM Watson, AI is entrenching in our world. A doctor friend uses Dragon Speak Medical Edition to transcribe his notes into the EHR system. That's the kind of tech we need.
Microsoft added its Skype real time translation service to cell phones and landline. In a global economy, this will be a game changer. And this is on top of Skype4B crashing past 50 million seats.
What else did we see a lot of? UC&C or UCaaS. So much of it. But when you have 2000+ companies plus thousands of resellers trying to gain some ground, the noise level will go up. Most of that noise is pure hype, spin and hullabaloo. More on that in another post.
Is there anything I missed? Is there something you are watching? Let me know.
]]>Like Tech Data's TD Mobility, Amazon already offers cellular plans from many cellcos as well as a wide selection of devices. In fact, because of its e-commerce platform, Amazon is a huge step better than TD Mobility, but it is customer facing, cutting out the partner. And it is doing that again now with consumer Internet and Voice.
If this works, it is just a matter of time till Amazon is selling to small business both cable and telco bundles. SD-WAN for partners looks more and more like a life saver.
Anything that can be transacted will be replaced by either Amazon, another website platform or AI (artificial intelligence). Machines are eating jobs!
If you are not adding Value, you will be replaced. In his book, Linchpin, Seth Godin talks about Genius and Art. Channel Partners have been doing their Art: helping businesses with their technology solutions for years. It takes Genius - and we all have Genius to share.
What does adding Value mean? It varies greatly from customer to customer and vendor to vendor.
One way is to provide advice. Another way is to be on top of technology and introduce clients to new technology like cloud and SD-WAN. It might be technical knowledge or business acumen. But you have to have something because automation is going to wipe out jobs.
Now Amazon Lightsail was announced VPS starting at $5 per month. They are going to crush the hosting business too, I guess.
]]>Content and ad money is the only area of growth for the Duopoly.
An analyst is projected that Cable companies will be the Incumbent Phone company in 2017 due to the number of cable phone lines sold compared to telco. The RBOCs have been trying to get out of the incumbent label for years, much to the chagrin of their ILEC brethren like Frontier, Windstream, CenturyLink and Fairpoint, who wish that the RBOCs would shut up.
The RBOCs have cellular, voice, data, broadband, big pipe, managed services, data centers and cloud in the catalog but the cash cow was the consumer triple play. Much like EarthLink and AOL floated on dial-up revenues for years, ILECs float on wireline revenues. Unfortunately, cable is eating their lunch in the broadband market.
Easier to dump a billion or four into a company that will provide some top line revenue than spend $24 billion on fiber to the home, where Verizon lost money.
Telco has pension and union liabilities that cable does not. These liabilities are now mainly under the RLEC umbrella in the form of CenturyLink, Fairpoint and Frontier, who purchased assets from many other ILECs and RBOCs, including the pension liabilities. It is quite the financial burden.
Content is the next revenue stream for the telco, following in the footsteps of cable, who have owned TV stations and content for years.
No idea how the telcos arrived at advertising as a viable revenue stream (maybe they are following Google's model). Yet "AT&T reports $1.5 billion and growing in annual revenue for its AT&T AdWorks division. That unit aggregates 14 million households and 35 million set-top-boxes nationwide, managing ad inventory across national ad-supported cable networks. AT&T claims it's the largest addressable advertising network in the industry, thanks in large part to its acquisition of DIRECTV." [telecomp]
It looks like we will soon be back in the days of AOL and Prodigy, where your ecosystem will be defined by your cell phone operating system (Android or Apple) and cell provider and broadband provider. The cellcos are providing free bandwidth for staying inside the ecosystem, making it tough for companies like DISH/Sling, Netflix and Layer3. Captured users, eyeballs, viewer habits, buying habits, ads, etc. will result in big money per user. It is a similar model that Amazon uses with Prime and Kindle. Users of a Kindle device buy Prime and spend more than 3x what a non-Prime member spends. And we keep it in the ecosystem. Google, Apple, Amazon, AT&T, Verizon and Comcast all competing for you.
]]>Telcos spent billions on both fiber and TV services. [Verizon reportedly spent $23 billion rolling out FiOS since 2004, some of it from rate hikes, some from government subsidies.] Unfortunately, by the time telco TV, like Windstream's Kinetic, is widely available cord cutting is accelerating.
From DSLR, "Telco TV and satellite TV providers saw record pay TV subscriber losses last quarter, according to the latest analysis by Leichtman Research. According to Leichtman, the pay TV sector lost about 210,000 subscribers last quarter, though this figure is dramatically lower than the 430,000 subscriber net loss stated by Wall Street research firms like SNL Kagan. While traditional cable providers "only" saw a net loss of 90,000 video subscribers last quarter, the telcos were particularly hard hit, losing 375,000 video subscribers last quarter -- compared 45,000 during the same quarter last year."
In the broadband realm, "Cable companies added a net of 775,000 broadband subscribers last quarter, compared to a net loss of 150,000 broadband subscribers during the same period," writes DSLR. [see chart here]
For consumers, it is all about the Internet and smartphones, according to Pew.
Telcos didn't want to get into the DSL game. Mainly to protect a highly profitable T1 business. The same way they threw obstacles at Google Fiber, the LECs threw obstacles at the newly minted DLECs - NorthPoint, Rhythms and Covad. Sure, some of it was incompetence on the part of the DLECs and GF, but the hurdles kept tripping them up. After they all filed bankruptcy, the RBOCs decided to get into the DSL retil game, to the chagrin of the independent ISP, who was finally making money on DSL. Undercut by the vendor, many ISPs failed or limped along for years, which affected many small businesses as the ISP was usually the local computer expert and Internet Provider. This was something that the LEC could not provide: personal service to the small business. To this day, the Duopoly can only supply commodity service with almost non-existent support. As they have gotten bigger and bigger to take advantage of scale, the support to the small business has suffered.
Small business is 99% of the businesses in America. Yet every provider wants to go up market.
There are almost 28 million small businesses in the US and over 22 million are self employed with no additional payroll or employees (these are called nonemployers). Over 50% of the working population (120 million individuals) works in a small business. But it is under-served by the Duopoly.
From the FCC's 2016 Broadband Report:
Think about those numbers. VZ spent $23B. Other telcos spent billions. The FCC donated billions in BTOP, BIP, ARRA, CAF, CAF II and USF funds to the effort to build out broadband across America. Private companies (PCOs, ISPs, WISPs and CLECs) have invested hundreds of millions more. Cable dropped bilions. Yet not everyone has good Internet????Or a choice of more than 1 ISP?
I have to wonder where this goes. The telcos spent billions to get triple-play just as that bundle becomes undesirable. They now have to build out fiber to stop losing broadband subscribers, so more hundreds of millions. At a time when their debt is High - and the pies for TV, broadband and voice are stagnant. Even cellular has peaked.
They are all chasing Enterprise, which I imagine means 500+ employees. There are only 30K businesses in the US with more than 500 employees. So Comcast, Charter, AT&T, Verizon, CenturyLink and Windstream are fighting desperately over the same 30,000 businesses and government contracts. With VZ acquiring XO (approved today); C-Link acquiring Level3 (ugh); and WIND Buying EarthLink, that leaves Zayo as the sole big indie.
What happened? Bad short-term decisions that cost jobs, revenue losses and more CAPEX spending than if they had just done it from the beginning. To still see announcements from the telcos about Gigabit deployments in select cities is just plain sad. The monopolies that were the Bell companies re-constituted but lost their edge. It's like they don't know how to compete at all. They just lean on their brand and hope for the best.
EoC wasn't widely enough deployed and sold. Yet everyone is banking on SD-WAN, which will likely just make SLAs crumble.
Small business has suffered from this mess -- and further with the mega-mergers and consolidation. Small businesses - all businesses - rely on telecommunications to do business. The Internet is vital to our economy. Let's hope we don't stifle it anymore.
]]>CenturyLink just sold off its data center business that was a combo of Qwest Cyber Centers and SAVVIS to a group of PE firms for $2.15B in cash and C-Link keeps a minority stake worth $150M in the new company. CL bought Savvis for $2.5B in 2011. Buy High; Sell Low. Bell-Head Mentality.
The PE coalition that bought the data centers also grabbed 4 cyber-security firms in order to announce this global security co, to be run by Manny Medina, former CEO of Terremark Worldwide.
Wired's headline says it best: The World's Telecoms Are Under Threat From All Sides.
Broadband, cellular and voice are all flat or declining markets.
IAAS and PAAS are ruled by Amazon, IBM and Google. Microsoft only got into the game recently and is doing better than all the telco's combined.
PE firms are buying up data centers as the world adjust to cloud computing, an app market and streaming TV and radio.
DDoS attacks are happening too often. So are Hacks. There are not enough fingers to fill all the holes in this dyke.
UCaaS is ruled by 8x8, Vonage Business, RingCentral, Fuze and a bunch of other providers that are not a telco. The PBX market may be shrinking but not fast enough for the other Hosted VoIP players. Cisco and Microsoft have chunks of the enterprise UCaaS business that the telcos don't.
Comcast Business is at $6B in annual revenue, which makes it a bigger CLEC than almost all that are left. WIND does $5B. EarthLink less than $1B. Birch and TelePacific are private. Level3 does $8B. CenturyLink does $17B (much of it ILEC revenue). Zayo is $2B.
Apps like Messenger, WhatsApp, Skype and Slack are replacing voice and SMS and even email. It is a topsy-turvy world. What's a telco to do? Well, merge! Get bigger because bigger solves nothing, but it makes money for top execs in the C-Suite and the Board room and on Wall Street.
Our economy spins on e-commerce and the Internet. When the companies that provide that Internet are too clunky to do it properly, what happens to our economy?
We went from a five nines voice network of reliability to cell phones and VoIP that quite frankly can't be more than three nines. Have you noticed the number of outages lately by telcos and cablecos?
There is a lot going on. There are many areas of opportunity, but the fall back from these guys is "more of the same", "do what I know" and "one more quarter!". None of these transactions is good for the industry, the economy or the consumers. They are stop gap, short term money movers. We are going to wake up shortly and realize that it is 1970 all over again. It makes the NSA job easier when there are few players, but what about the customers?
In the data center space, one master agency contacted me after the C-Link announcement to tell me that the folks at CenturyLink have no details about the sale. How can that be when Monroe has been trying to sell the DC division all year? Great planning, guys!
Whose customer is it? Will the agent still get paid? Will the customer see a price increase? Who is the billing entity? Who will the customer be paying? These are good questions that bothered some TELX customers when Digital Realty took over.
I keep seeing executives at master agencies say these deals are good. Do they say that in print because they have to?
Don't forget that you can leave a public comment with the FCC on any of these mergers. You can voice your opinion here. You will need a docket number but you can google it after the filings are in the system.
]]>Krebs experienced an IOT botnet attack earlier this month. An ISP client was under two DDoS attacks in August.
These attacks are increasing in frequency -- and are not going away. This will be normal business soon.
Email and iPhone hacks are in the news.
What are you doing to protect your clients?
Quite a few data centers offer a DDoS Mitigation service. (So does Level3).
There are a number of managed security service offerings - from firewall to IDS to UTM* - available from a number of providers.
In a time when bandwidth pricing is decreasing -- and customers want to spend less -- someone needs to bring up the topic of security and redundancy. Why not you?
*Intrusion Detection Service and Unified Threat Management
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